Intel Plunges 9.5% as Foundry Cuts Shake Investor Confidence—Can the Chip Giant Reclaim Its Mojo?

Summary
• Intel shares nosedived 9.5% intraday amid CEO Lip-Bu Tan’s abrupt foundry exit plan
• New CEO halts European plant projects and slashes 15% of workforce in aggressive cost-cutting
• Stock trades at $20.48, breaching 52-week low of $17.665 amid $2.9B quarterly loss

Intel’s 9.5% intraday plunge has sent shockwaves through the semiconductor sector, erasing most of its 2025 gains. The collapse follows CEO Lip-Bu Tan’s announcement to pause foundry operations and cut production at European facilities, raising existential questions about the company’s AI ambitions. With the stock trading near 52-week lows and a $2.9B quarterly loss weighing on sentiment, investors are scrambling to assess whether this marks the end of Intel’s revival hopes or a necessary but painful reset.

Foundry Exit and Workforce Reductions Spark Panic
Intel’s catastrophic selloff stems directly from CEO Lip-Bu Tan’s admission that the company’s foundry business has failed to secure external customers for its 14A node technology. The company’s SEC filing revealed it may ‘pause or discontinue’ the unit entirely if customer commitments remain unsecured. Compounding the crisis, Intel announced a 15% workforce reduction, shuttering European plants in Germany and Poland while slowing Ohio production. The $800M impairment charge for ‘excess tools’ and Tan’s admission of ‘fragmented, underutilized’ factories have crystallized investor fears. Despite beating revenue estimates, the stock’s 9.5% drop reflects a fundamental re-rating of Intel’s long-term viability in the AI-driven semiconductor race.

Semiconductor Sector Volatile Amid AI Hype—AMD Defies Intel's Slide
While Intel’s collapse dominates headlines, the broader semiconductor sector remains mixed. AMD, the sector’s top performer, rose 2.71% as its AI chip demand outpaces rivals. TSMC’s recent 61% profit surge from AI-driven manufacturing contrasts sharply with Intel’s struggles. However, sector-wide headwinds persist: Trump-era tariffs, China’s chip smuggling networks, and Samsung’s 56% profit plunge underscore the sector’s fragility. Intel’s foundry exit highlights the sector’s bifurcation—leaders like AMD and TSMC leverage AI demand, while laggards face existential risks.

Bearish Options Play: Leverage Put Volatility Amid Key Support Breakdown
• MACD: 0.418 (Signal Line: 0.498, Histogram: -0.081) signals bearish crossover
• RSI: 51.29 (oversold threshold at 30) suggests continued weakness
• Bollinger Bands: $20.48 sits near lower band ($21.87) as support crumbles
• 200D MA: $21.82 (price below) confirms bearish bias

Intel’s technicals align with its fundamentals in a deep bearish phase. The stock is testing 200D support ($20.17–$20.35) and faces critical resistance at 30D levels ($23.23). Given the 51.42% price change ratio in put options and 35%+ implied volatility, bearish strategies dominate. Two high-conviction options stand out:

• INTC20250801P19: Put strike at $19 (exp 8/1), IV 35.21%, delta -0.063, theta -0.0018, gamma 0.1159, turnover 39,863. This contract offers 684x leverage for a 50% price drop, ideal for capitalizing on a 19.50–19.00 breakdown.
• INTC20250801P19.5: Put strike at $19.5 (exp 8/1), IV 35.74%, delta -0.155, theta -0.0002, gamma 0.2193, turnover 50,530. The 228x leverage ratio and 33% price change potential make this a high-gamma play for a sharp move below $20.00.

Payoff Estimation: At a 5% downside (target $19.46), INTC20250801P19.5 would yield max profit of $0.54 per contract (35% gain). For INTC20250801P19, the same scenario delivers $1.04 (680% gain). Aggressive bears should prioritize the $19.50 put for its gamma sensitivity, while the $19 put offers asymmetric leverage. If $19.00 breaks, INTC20250801P19.5 could unlock 300%+ returns.

Backtest Intel Stock Performance
Intel (INTC) has historically shown positive short-to-medium-term performance following a -10% intraday plunge. The backtest data reveals that:1. Frequency and Win Rates: The event occurred 604 times over the past five years, with a 3-day win rate of 52.15%, a 10-day win rate of 55.46%, and a 30-day win rate of 53.15%. This indicates a higher probability of a positive rebound in the immediate aftermath of such a significant drop.2. Returns: The average 3-day return following the event is 0.23%, with a maximum return of 0.60% on day 14. The 10-day return is slightly higher at 0.27%, with a maximum return of 0.82% on day 21. The 30-day return is 0.18%, with a maximum return of 0.46% on day 35. These returns suggest that while the rebounds are modest, they can still lead to positive gains in the short term.3. Maximum Returns: The data shows that the stock can experience significant volatility following a -10% plunge, with maximum returns of 0.60% to 0.82% within the first 21 days. This highlights the potential for substantial gains if held for the right period after the event.In conclusion, Intel has a favorable track record of positive short-term performance following a -10% intraday plunge. Investors considering this strategy should be prepared for modest returns and the potential for significant volatility in the immediate aftermath of the event.

Bottom-Fishing Begins: Intel’s $19–$19.50 Thresholds Dictate Next Move
Intel’s 9.5% collapse signals a pivotal inflection point. With 30D support ($23.23) and 200D resistance ($20.17–$20.35) in play, the next 72 hours will determine whether this is a short-covering bounce or a capitulation to $18.50. The options market’s 35%+ IV and $19.50 put liquidity confirm bearish positioning. AMD’s 2.71% rise as the sector leader underscores the gap between winners and losers. Investors should prioritize the $19.50 put for a 300%+ payoff if the $20.00 level breaks. Watch for volume spikes and a 50D MA crossover below $20.50 to confirm the new downtrend.